Philips swings to loss as Europe's economy falters
By Roberta Cowan
AMSTERDAM (Reuters) - Philips swung to a fourth-quarter net loss as government cuts ate into its healthcare equipment business and a slowdown in European construction activity and consumer spending hit its lighting operations.
Europe's largest consumer electronics maker posted a net loss of 160 million euros ($210 million) after a profit of 465 million a year earlier, and the group said prospects for this year were no brighter.
"We are cautious about 2012, given the uncertainty in the global economy, and Europe in particular," chief executive Frans van Houten said on Monday.
"Our fourth-quarter results were impacted by weak European sales, postponement in deliveries of existing orders in our healthcare sector, and inventory correction actions and other operational issues in our lighting business."
Philips said it was committed to its 2013 goals and underlying margins would improve in the latter part of 2012, but analysts including S&P Equity Research's James Crawshaw were skeptical of next year's targets and said the second half improvement was at risk from challenges in the lighting division as the industry moves to light-emitting diodes (LED).
"We anticipate ongoing losses at the components arm, Lumileds, and rising competition in the LED lighting market from Korean and Chinese vendors," said Crawshaw.
Philips makes almost 30 percent of its sales in Europe, where they fell 5 percent in the fourth quarter. Government austerity programs there are squeezing hospital budgets, and some have put orders for the latest equipment on hold. Continued...